Social media platform Reddit's RDDT.N shares surged 12.3% to $177.49 in premarket trading on Friday as the company is poised to join the S&P 500 index next week.
RDDT is set to replace AvalonBay Communities AVB.N in the S&P 500 effective Tuesday, Aug. 18, S&P Dow Jones Indices announced late Thursday.
Apartment rental company AVB is being acquired by S&P 500 member Equity Residential EQR.N in a mega-REIT deal.
Stephens analyst Melissa Roberts said in a note she expects passive funds will need to purchase 25 million RDDT shares, which implies nearly five days of buying demand.
New S&P 500 additions have historically outperformed by 6.8% from announcement to addition, with most of the outperformance occurring on the day after the announcement, Roberts said.
San Francisco-based RDDT, which went public in March 2024, has about 192.4 million shares outstanding for a $30 billion market cap.
Last month, RDDT reported second-quarter revenue that beat expectations and forecast current-quarter revenue above consensus, but said choppy search-engine traffic had affected U.S. user growth in Q2.
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